I just saw a report that Multichoice has written off about $21 million in funds locked with Heritage Bank, whose license was recently revoked by the CBN.
This marks another major milestone in the catalogue of woes faced by the multinational company in its largest market, Nigeria.
The harsh operating environment, characterized by a volatile forex regime, has seen its remittances drop by over 30%—from $91 million last year to $65 million this period.
Additionally, it incurred a $1 million loss in extraction costs due to the weakening naira, which has also significantly impacted its loan repayments to its holding company. The devaluation means Multichoice must pay back more dollars than initially anticipated.
Subscriber losses, currently over 200,000, are projected to hit 1.1 million by 2025—signaling a serious red flag for its continued existence in the Nigerian market.
For me, despite these challenges, the core issue is the fleeting nature of technology and evolving viewer preferences, driven by shifting demographics and undefined content tastes.
How streaming took over
- Streaming services have decimated their business, much like Multichoice disrupted free-to-air broadcasters like NTA and AIT when it entered the market. Back then, Multichoice attracted viewers with cheap foreign imports, popular sitcoms, series, and sports.
- They strengthened their foothold with local Nollywood content, live global events like the World Cup and Grammys, and created niche offerings such as GOTV and regional channels.
- At their peak, they almost monopolized the market, pushing out competitors like Toyin Subair’s HITV.
- However, their overconfidence and shortsightedness prevented them from adapting to rapid changes in technology and viewer behaviour.
- The rise of streaming platforms like Netflix has been devastating, primarily due to two key factors: cost and viewer control.
A DSTV premium bouquet costs over N40,000—around 40% of the minimum wage—while Netflix charges about N4,000. Add the freedom to watch what you want, when you want, and how you want, and it’s clear where the market is headed amidst inflation, reduced disposable income, and declining living standards.
DSTV, by contrast, offers limited bouquets with fixed schedules. Miss a show? Hope for a repeat. In today’s world of heightened tastes and cultural freedom, this rigid model feels outdated and restrictive.
What’s Next for Multichoice?
Despite these setbacks, Multichoice has played a critical role in Nigeria’s development over the past two decades. It has driven CSR initiatives, created jobs, supported the entertainment industry, paid taxes, and generally upheld strong corporate responsibility.
- But make no mistake—Multichoice is haemorrhaging at an alarming pace due to factors both within and outside its control.
- The $21 million loss in Heritage Bank is unforgivable. This money could have been invested in R&D, new technology, or robust business development strategies to shore up market confidence.
- Yet, there seems to be no accountability or consequences for this colossal error, indicating weak governance and poor decision-making.
- Their public sector engagement is equally lacklustre. Stronger lobbying efforts with the CBN might have prevented this situation. Losing $21 million during a subscriber exodus is akin to an aging business losing its last customers—it’s catastrophic.
Strategies for Recovery
1. Public Listing: Multichoice should consider going public to raise equity capital instead of relying on dollar-based loans from its parent company. This is especially critical given the naira’s depreciation and rising loan costs.
2. Diversification: Invest aggressively in other sectors to hedge revenue streams. Sports betting is one area they’ve ventured into, but its impact remains unclear.
3. Streaming Platforms: Either acquire or develop a robust streaming platform to compete with Netflix and YouTube. Simultaneously, reposition DSTV to target the over-40 demographic with calm, predictable programming such as news and sports.
4. Localized Content: Double down on regional and Nollywood content while collaborating with YouTube creators and other streaming platforms to engage younger audiences.
5. Innovation in Pricing: Introduce more affordable and flexible pricing tiers to accommodate the shrinking disposable income of subscribers.
Time Is Running Out
Multichoice is bleeding subscribers at a pace that could render it irrelevant within a few years. But it’s not too late if they act quickly and decisively. Failure to adapt will lead to their demise, which would be a sad end for a company that has contributed so much to Nigeria’s economy and culture.
Multichoice must wake up and smell the coffee before it goes stale.
